Business investment at manufacturing firms continues to fall sharply according to the Office for National Statistics who estimate a 15.9 per cent quarter on quarter fall for the three months from April to June (q2).
The engineering and vehicles (-20.5 per cent), metals and metal goods (-20.1 per cent) and food, drink and tobacco (-16.5 per cent) industries contributed the most to the drop.
Incorporating all UK businesses, investment was down 10.2 per cent in q2 compared with q1 and was 21.8 per cent lower than the same period last year.
Last week the Confederation of British Industry said it expects business investment to be down 17.8 per cent for the year in 2009. It also expects investment to fall even further next year – estimating a drop of 5.9 per cent due to overstocking and uncertainty over demand.
“The sharp fall in business investment this year is a real concern, as are the public finances, and both will affect UK economic prospects in the years to come,” said CBI director general Richard Lambert.